How to leverage a mergers and acquisition strategy for email list growth
Q - What is your Superpower? A question I’ve asked a couple of hundred times to my podcast guests.
A - Email Marketing
There are lots of discussions going on every day about email list growth, new opt-in subscriber acquisition. There are seminars, webinars, “experts” from every part of the world.
Let's look at this from a totally different perspective.
Why not just buy the company that has the email list that you want to market to?
Think about it. As marketers, we spend money with Google, Facebook, programmatic digital advertising to build our email lists, generate leads, and increase sales.
What if you could own that asset. Instead of paying to run ads, you decided to purchase a cash flow positive business that has already built a permission-based email list?
Or, maybe the digital property or website has a huge volume of traffic and the current owners simply don’t have the expertise to convert their web visitors into email subscribers?
I’m currently evaluating several websites (for acquisition) with consistent monthly visitors in the millions. Not one of these business owners has successfully built any sort of email marketing strategy or email list.
“THE BATTLE FOR CUSTOMER ATTENTION HAS NEVER BEEN SO FIERCE.
"We've seen an explosion in brands using online channels to promote their services and products to potential customers.
"The problem with this model is that you're not only battling other competitors for that attention; you're competing against every site that publishes informative videos, the latest trends, and educational content that serves the needs of their audiences"
Kieran Flanagan @searchbrat https://blog.hubspot.com/marketing/why-hubspot-is-acquiring-the-hustle
WHY HUBSPOT HAS ACQUIRED THE HUSTLE FOR $17.2 MILLION.
”Newsletters, podcasts, premium content, and other media have exploded in popularity for startups and scaleups looking for best practices and tech news.
So how can companies adapt to this change? We believe that the next generation of software companies will invest in media that earns the attention of their audience. Instead of the traditional model of having a software company embedded inside of a media company, we predict that the next generation of tech companies will have the opposite – a media company embedded inside a software company”.
The idea of BUY THEN BUILD was a new one for me a few years back.
However, if you have documented your customer avatar and your customer value journey for your current customers, then you have a starting point to explore the possibility of acquisition to scale and grow our brands and companies.
I’m not qualified nor offer financial or investment advice here, however, my current project experience has shown me several attractive target companies to purchase. Financeable at 80% to 90% with good cash flow to easily cover the cost of borrowing, run and grow the business.
Speed to the market, the potential to disrupt the market (like Intuit / Mailchimp), add new revenue, increase the budget for your email marketing team are a few of the quick potential wins.
WHO IS THE TARGET MERGERS AND ACQUISITION MARKET?
“Small And Midsize Business (SMB) - Gartner defines SMBs by the number of employees and annual revenue they have. The attribute used most often is the number of employees; small businesses are usually defined as organizations with fewer than 100 employees; midsize enterprises are those organizations with 100 to 999 employees.
"The second most popular attribute used to define the SMB market is annual revenue: small business is usually defined as organizations with less than $50 million in annual revenue; the midsize enterprise is defined as organizations that make more than $50 million, but less than $1 billion in annual revenue."
HOW BIG IS THE MARKET?
595,000 businesses close each year.
How many have an email list in your niche?
(latest statistics as of 2008 - according to SBA estimates).
These businesses will have customer lists, email lists, content, website traffic you can monetize, systems and processes, and team.
TOP REASONS FOR CLOSING
- Shiny Object
$10 TRILLION DOLLAR OPPORTUNITY
- 4.5 million Businesses worth $10 trillion will transition over the next 10 years.
- Only 20% of businesses that go to market end up selling - BizBuySell Insights 2019
- SME EBITDA sale multiple = 2.8x - DealStats Value Brief.
- 50 Million Baby Boomers will retire over the next 10 years - Insured Retirement Inst.
- 96% of businesses fail to continue for 10 years or more - Inc. Magazine Report
- PE EBITDA buy multiples average 12X - Pitchbook US PE Report 2019
- 12 Million Baby boomers own businesses - Wealth Management Report
- 420k Boomers Businesses/Yr. Will Transition for the next 10 years - GenEquity Sights
- 15k US & 30k Global M&A deals closed in 2019. Decline 15%/12% - IMAA Report.
Not a new idea. LAST YEAR, INTUIT BOUGHT MAILCHIMP FOR $12 BILLION.
Why would Intuit, a global technology platform in the SAAS financial with brands such as TurboTax, QuickBooks, Mint, and Credit Karma buy Mailchimp, an email marketing platform?
To become the center of small business growth, and to disrupt the small business mid-market.
A global customer reach with 13 million total users globally, 2.4 million monthly active users, and 800,000 paid customers; with 50 percent of customers outside of the U.S.
Data and technology in the form of 70 billion contacts, and 250+ rich partner integrations.
While this example is not where most SMBs play, growth by merger or acquisition is not reserved for the Fortune 100 companies.
HOW BIG IS THE OPPORTUNITY?
In the USA, there are approximately 28.8 million Small And Mid-size businesses. There are approximately 2.59 million businesses for sale. Of those for sale, only 431,670 will sell. The opportunity before targeting by industry shows that there are 2.16 million SMBs that we can target to acquire.
In Canada, there are approximately 1.1 million Small And Mid-size businesses. There are approximately 99,000 thousand businesses for sale. Of those for sale, only 16,500 thousand will sell. The opportunity before targeting by industry shows that there are 82,500 thousand SMBs that we can target to acquire.
In Europe, there are approximately 25.1 million Small And Mid-size businesses. There are approximately 1.5 million businesses for sale. Of those for sale, only 250,000 thousand will sell. The opportunity before targeting by industry shows that there are 1.25 million SMBs that we can target to acquire.
In Australia, there are approximately 2.1 million Small And Mid-size businesses. There are approximately 126,000 thousand businesses for sale. Of those for sale, only 21,000 thousand will sell. The opportunity before targeting by industry shows that there are 105,00 thousand SMBs that we can target to acquire.
Here are the totals. # of SMBs - 57.1 million, For Sale - 4.32 million, # That Will Sell - 719,170, # WE CAN TARGET TO ACQUIRE - 3.6 MILLION SMBS.
Sources: Deloitte, Forbes, NY Times, DealStudio, Entrepreneur, BizBuySell.com, FSB.org.uk, DealStream.uk, ic.gc.ca, Statista
“My prediction: More companies (SaaS in particular) will start acquiring niche newsletters and media companies to gain access to their ideal customers.” Ross Simmonds - https://foundationinc.co/lab/hubpsot-hustle-acquisition
Think strategically. Start by looking at where you are currently spending hard cash for advertising to acquire new email subscribers and customers.
Is there an SMB that you can buy that has already attracted your target audience?
With programmatic advertising, what websites and blogs are your ads currently being displayed on? Can you buy and own the website or blog and now actually own the media you were only renting?
We’ve got one target business acquisition with a monthly social media view rate of eight million per month, 657,000 website visitors, and currently NO email list …. Hmm